UK: Tax Update - Monday 19 December 2011

Last Updated: 30 December 2011
Article by Richard Mannion

1. General news

1.1. Copies of legislation in Tribunal and Court hearings

The Judge in the case of Agar Ltd (TC01625) has issued a clear reminder to all participants in hearings that any legislation produced in evidence should be the version in date at the relevant time.

"14. As would be expected, HMRC brought copies of the relevant legislation with them to the hearing of the appeal (which was listed as a basic case, so proceeding straight to a hearing without any prior exchange of evidence or any statement of case from HMRC).

15. Unfortunately, however, it transpires that the legislation which they brought with them was not the up to date version. The provisions of schedule 56 were significantly amended by schedule 11 to the Finance (No 3) Act 2010 and the Finance (No 3) Act 2010, Schedule 11 (Appointed Day) Order 2011 (SI 2011/132) with effect from 25 January 2011 (which, it will be noticed, was part of the way through the tax year which is the subject matter of this appeal).

16. If the changes made by the Finance (No 3) Act 2010 had been relevant to the issues in this case, this could have been a crucial point. In fact, the changes made do not affect the issues in this appeal and it is therefore not necessary for us to decide the point. HMRC's oversight is however unfortunate, and raises the question of how a taxpayer is supposed to remain fully informed of all current legislation when even HMRC seem unable to do so.

17. Therefore whilst the change to the legislation does not affect matters in this case, we would wish to send a clear message to HMRC and appellants that when they produce copies of legislation for hearings, they should produce copies showing all amendments which have been made over any relevant period."

2. Private Clients

2.1. US tax reminder

Remember that US taxpayers will generally want to pay their UK tax by 31st December to get credit against their 2011 US tax liability.

2.2. French Wealth Tax

The French Embassy has the following on their website about the exemption for financial investments held by non-residents.

16 - I own a property and I hold a bank account and a few investments in France. Am I liable to wealth tax (ISF)? Non-residents are only liable to ISF on assets they own in France. Moreover, their financial investments are expressly excluded from the basis of taxation: in order to encourage non-residents to keep or increase their financial investments in France, article 885 L of Code Général des Impôts exempts those investments from ISF.

Married couples and persons who have contracted a PACS (Civil Partnership) should file a joint tax return.

DETAILS

Are considered as French assets:

1. Tangible movable assets physically based in France;

2. Properties directly or indirectly owned in France, or actual rights relating to such properties;

3. Shares in French or foreign companies or legal persons, which assets are mainly (more than 50%) made of properties located in France, or rights relating to such properties, proportionally to the value of these assets compared to the global value of those of the company;

4. Shares in unlisted foreign companies or legal persons which headquarters are located outside of France and which assets are mainly made of properties located in France, or rights relating to such properties, proportionally to the value of these assets compared to the global value of those of the company;

5. Equity securities in a French legal entity (representing at least 10% of its share capital)

6. Debts, when the debtor is established in France and securities issued by the French State or by any legal entity which headquarters are in France, regardless of the composition of its assets.

The threshold of taxation is € 1,300,000. As a result, the ISF is not due when the value of the taxable assets is less than € 1,300,000 on January 1st 2011.

www.ambafrance-uk.org/FAQ-Income-Tax-Inheritance-Tax

3. Business Tax

3.1. The new proposals for capital allowances on fixtures

HMRC held an open meeting on 13 December to discuss the new proposals for capital allowances and fixtures. A brief summary of how the proposals work is as follows (with legislative references to CAA01):

For the transitional period between 1 or 6 April 2012 and 1 or 6 April 2014, those who sell/acquire fixtures will not be required to meet the pooling condition. This will mean that an acquirer in this period will only be able to preserve the value of allowances in respect of such expenditure if:

  • The vendor did not pool the expenditure (in which case the s562 apportionment process will apply for an acquirer able to claim allowances, subject to any previous owner having claimed when s185 and s62 will limit the capital allowance acquisition value for the purchaser), or
  • The vendor pooled the expenditure and either the fixed value or disposal value statement requirements are met. If the vendor has pooled the expenditure, in the majority of cases this will mean that the ability to claim allowances on this qualifying expenditure will be lost unless a s198 or s199 election is made. If it is not possible to agree values or get a s198/s199 election signed, then there will be recourse to the s563 Tribunal process.

Prior to 1/6 April 2012 the s563 procedure for referral to a Tribunal requires both parties to make the application. The new proposals amend this requirement, so that only one of the parties need apply. The mechanics of the Tribunal process are still being worked out and it is expected guidance will be issued shortly. The latest indications are that this will be heard before the First Tier Tribunal, and each party will bear their own costs. It is expected that the majority of such Tribunal cases should be relatively straightforward and could be dealt with under the simplified process by written submissions from both sides. More complicated cases will require a hearing, and even though land values may be required to determine the capital allowance position, it is not envisaged these sorts of hearings will need to be heard before a land tribunal.

From 1 or 6 April 2012 it will be possible to make a s198 election in respect of a s196(1) table item 9 disposal event (permanent discontinuance of a qualifying activity followed by a disposal of the qualifying interest), in addition to an item 1 disposal event.

From 1 or 6 April 2014 there will be a mandatory pooling requirement by the vendor in order to establish entitlement to claim capital allowances on fixtures acquired second-hand where a previous owner was able to claim capital allowances. This will mean that no allowances can be claimed on fixtures unless:

i) Neither the vendor nor a previous owner was able to claim capital allowances on the fixtures (so mandatory pooling condition cannot be met and the new CAA01 s187A does not apply), or

ii) The Pooling condition is met - the expenditure has been allocated to a pool by the vendor before the date of disposal, or a first year allowance has been claimed in respect of that expenditure, and either of the following two conditions is met;

  • Fixed Value: the vendor has been required to account for a fixed value for the disposal under items 1, 5 or 9 of the table in CAA01 s196, and that value has been reached either (a) by determination of a Tribunal as a result of an application under CAA01 s563, where the application to the Tribunal is made within two years of the date of disposal/acquisition, or (b) a s198 or s199 election is made within two years of the date of disposal/ acquisition, or;
  • Disposal Value Statement: the vendor has been required to bring a disposal value into account under item 2 or 3 of the table in s196 or item 7 of the table in s61, and has made a written statement of that value to the purchaser within two years of the date of the disposal to the purchaser.

4. IHT & Trusts

4.1. Erroneous late filing penalty notices from HMRC

HMRC has issued late filing penalty notices in respect of a number of Trust and Estate Returns on the basis that the paper 2010/11 tax return had not been filed by 31 October 2011.

On querying the position, as electronic submissions had been made well before the online deadline of 31 January 2012, we have been told that all Trust and Estate Returns filed electronically on 25 November 2011 were logged as paper returns. HMRC is aware of the issue and staff are working though lists of possibly affected cases and issuing cancellation notices.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Richard Mannion
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions